PC's fiscal move: PM soothes ministries' ire

Prime Minister Manmohan Singh has chipped in to end resistance from key ministries against finance minister P Chidambaram's c move imposing restrictions on their expenditure kitty.

Chidambaram's ministry is not willing to increase the gross budgetary support (GBS) or plan size, over Rs 5,21,000 crore in 2012 budget, to keep fiscal deficit at 5.2%. Plan size is the money used to fund Central government schemes.

The GBS is the government spending on social sector schemes such as Bharat Nirman, rural employment guarantee and National Rural Health Mission. Besides, it includes Centre's assistance to various states.

The finance minister has made it clear to the Planning Commission, which allocates money to different ministries, that the GBS increase in the past few years was arbitrary and was a cause for fiscal mismanagement.

The ministry has suggested that the plan size should be just 10% of the revised budget estimate, which is around 20% less than the original allocation for the current financial year.

The decision has invoked a fury of angry representations from different ministries.

Government sources said that the PM had called plan panel deputy chairperson Montek Singh Ahluwalia and Chidambaram for a meeting on Friday evening to take a view on the plan size for 2013 budget.

Sources said that a decision to increase the plan size by 15% of the revised estimate was taken with the PM asking the plan panel to provide sufficient funds to certain ministries. This would include ministries which have prudently utilised the money given in the past year.